Archive for the ‘Retirement Income Calculators’ Category

Now that the confetti has settled from New Year’s Eve celebrations, tax season is upon us, and you may have noticed a familiar document in your mailbox: your W2s. Although preparing taxes can be an extra strain on what is an already busy schedule, it also presents an annual opportunity to evaluate your finances and think about long-term financial planning.

Unlike not paying your taxes, nobody will come after you if you’re not planning for retirement—but that doesn’t make it any less essential. Failing to think about how you will continue to finance your lifestyle once you are no longer working can spell disaster in the final stages of life. The I’ll worry about it later attitude can mean putting off planning until it is too late.

Facing retirement planning head-on can be daunting, but taking the process step-by-step can ease the intimidation factor. The first step in long-term financial planning is figuring out, based on your current financial picture, the difference between your expected retirement income and need. If this figure is calculated early, there will be plenty of time to take steps to close that gap. Research by EBRI shows that those who take the time to calculate that number- regardless of its size- feel more confident in their ability to afford a comfortable retirement.

If you are married or have a partner, do this exercise together. However, women are likely to live longer than their spousesso keep in mind how your retirement income might change if your spouse passes away.

The first step in calculating your expected retirement gap is totaling your expected sources of retirement income. There are usually three sources of retirement income, often referred to as the three legged stool: Social Security, employer-provided pensions or retirement plans, and personal savings and investments.

1. Social Security: Social Security is an important source of retirement income, especially for women. To find out your Social Security benefit, sign up for an account at www.ssa.gov/myaccount.

2. Pensions and Retirement Plans: Traditional employer-provided pension plans offer you a set amount each month after your retirement based on your salary and how many years you worked. 401(k) and 403(b)-type plans allow you to invest money in a fund that you will have access to when you retire.

3. Personal Savings and Investments: Personal savings and investments may be spread throughout a number of accounts. This could include your home, however, since it is not a liquid asset, be careful how you calculate it, and consider whether you plan to rent or sell it after retirement.

The second step in calculating your expected retirement gap is figuring out how much you will need in retirement. Many experts recommend expecting to need at least 85% of your pre-tax income in order to maintain your current living standard. WISER instead recommends 100% to take into account the longer life spans of women and to safeguard for unexpected healthcare costs.

Calculate the difference between the numbers you found in steps one and two to find the gap between your retirement income and need. The good news is there are many easy-to-use online calculators that can help you with these steps. Check out the calculators tab at www.retireonyourterms.org for a variety of retirement planning tools. Once you have that number, you can begin to take steps to close the gap, such as prioritizing investing and finding more ways to save.

Whether you feel you are over-prepared or woefully unprepared for retirement, acknowledging the current state of your finances is a crucial first step towards achieving security during your later years of life.

The New Year presents us all with an opportunity to reevaluate our priorities and make some new yearâ€™s resolutions. Sometimes we have a habit of creating really extravagant goals for ourselves each year, hoping that this year will be the year to change it all. But by the time the New Year ball drops again, we often feel disappointed that we didnâ€™t accomplish all we had in mind. This year, letâ€™s resolve to make some financial resolutions that will stick!

WISERâ€™s mission is to help you create achievable savings and investing practices that can be maintained for a lifetime. To help you create your own unique, financially savvy path towards retirement, we have put together resolutionsâ€”one for each monthâ€”that are realistic and attainable. Take this opportunity to start fresh in 2011 with new goals for your financial future. Then when the ball drops on this year, you will be on your way to a more secure retirement. From all of us at WISER we wish you a happy financial new year in 2011!

1. January â€“ Resolve your budget. Even if you feel like you are swimming in debt or living paycheck to paycheck, the first step to taking control is knowing how much money is coming in and where it is going. Our budget worksheets can help track where your money is going and help you establish some firm financial goals. Simply taking the time to calculate the numbers and having them right in front of you can be empowering and help motivate you to get (and stay!) on track.

2. February â€“ Invest in your financial relationships.

This month, take time to sit down with your partner, spouse, significant other, (or even just yourself) and review all of your finances â€“ look at what you spend each month, make sure you are both aware of each otherâ€™s employee-sponsored or other retirement plans and assets, review your insurance needs, and create an organized file with your important documents. Try not to let it become an overwhelming conversation, but make it your goal as a Valentineâ€™s day gift to yourself and your loved ones to have a financial discussion about the future.

3. March â€“ Prepare for Tax Season.

A quick way to immediately start saving before your tax refund burns a hole in your pocket is to have your tax refund automatically put into a savings bond. Visit the IRS website for great information that can help you fill out your tax forms so that you can instantly start saving with government bonds.

4. April â€“ Start a â€œRainy-dayâ€ fund.

April showers bring May flowers, and this month is a great opportunity to start a â€œrainy-dayâ€ fund. Many experts recommend having about six monthsâ€™ worth of expenses in a savings account to cover sudden unemployment or other emergencies. Of course it will take some time to build up to this amount, but resolve this April to start stashing away some money each month, even if itâ€™s just a small amount, for that rainy day.

5. May â€“ Show Mom you really care.

May is a time to celebrate our mothers and all the other women in our lives who have done so much for us over the years. A great way we can show our mothers and other older relatives our appreciation is to make sure they will have the financial assistance they need in retirement. Take time this month to have a conversation with your parents or others who may depend on you down the road about their caregiving needs and retirement plans. Helping them now will also help you in the long run. Visit the National Alliance for Caregiving for great resources on this topic.

6. June â€“ Take a vacation from your finances by paying yourself automatically.
Put yourself at the top of your â€œpayeeâ€ list. Regular automatic deductions from your paycheck or bank account into a savings, investing or retirement account will keep you on track toward your short and long-term financial goals. Commit to save as much as you can each month, but if you donâ€™t feel like you have a lot to save, start small. Find a way to save even just $25 a month towards your retirement goals.

7. July â€“ Kick the summer doldrums by taking a long-term view. Summer months give us the opportunity to slow things down and appreciate the long days of summer. This is good time to think long-term about your retirement needs.Â Take some time this month to play around with a retirement calculator and start to get a sense of what you will realistically need. Donâ€™t let this task overwhelm you, but instead try plugging in different scenarios and allow yourself to plan for the future. A good calculator we recommend can be found at www.360FinancialLiteracy.org, specifically the Retirement Planner Calculator.

8. August â€“ Feeling the heat of debt?

Letâ€™s admit it; most of us have some pesky debt that is hanging over our heads. Take this month to face the heat and organize your debt. Resolve to stop adding to your debt and start making some headway on paying it off. Check out WISERâ€™s Debt Warning Signs Fact Sheet to see where you fall when it comes to financial debt, and what you can do to start getting out of it.

9. September â€“ Itâ€™s back to school time, so educate yourself.
If you are not already investing your money and feel overwhelmed by the thought of things like stocks, bonds, and mutual funds, then commit this month to educating yourself on these topics.Â Read at least one book or informational booklet that covers the basics of investing.Â You do not need to be an expert in finances to successfully plan and save for retirement; a little knowledge of the basics can go a long way. WISERâ€™s booklet, â€œWhat Everyone Needs to Know About Money and Retirementâ€ is a great place to start.

10. October â€“ Trick or Treat? Understand Financial Scams.

Sometimes itâ€™s hard to tell whether or not something is a great financial opportunity or just too good to be true. Use October as the time to educate yourself about financial scams and abuse that unfortunately happen more often then weâ€™d like to think. WISERâ€™s Too Good to Be True Checklistcan help you spot a financial scam, and our Elder Financial Abuse Brief can also help you look out for those you love. Then share this information with a friend or family member to help protect them too!

11. November â€“ If you have benefits at work, give thanks! And learn how to maximize your options.

For many companies and organizations, November is benefits enrollment season where you can sign up or make adjustments to your benefits. Take this month to learn more about your individual benefits and how you can make the most of them.Â To help you think about this, check out WISERâ€™s brochure â€œ20 Ways to Take Advantage of Your Company Benefits Planâ€.Â If your company does not offer a benefits plan, take this time to research what you can do on your own, like opening an IRA (Individual Retirement Account).

12. December â€“ Celebrate your financial success.

As the year comes to an end, celebrate all that you have accomplished this past year. Look back on all of the financial strides you have made and commit yourself to keeping up those goals and improving upon your success next year. If for some reason you were unable to meet your financial goals, then take this month to recommit to your financial future and to making each month count in 2012. One month at a time can make all the difference when it comes to saving for retirement.

-On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009. This new legislation provides a one-time payment of $250 to Social Security and Supplemental Security Income beneficiaries. Over 60 million beneficiaries will receive a one-time payment. Social Security expect all payments to be delivered by late May 2009. To assist Social Security in issuing these payments as quickly as possible, beneficiaries should not contact Social Security unless they do not receive their payment by June 4th.

-A new law may make it easier for some Americans to allow their retirement funds to recoup losses. Thatâ€™s because mandatory withdrawals from certain retirement accounts have been waived for tax year 2009. Usually, anyone age 70 1/2 or older is required to withdraw funds from their retirement plans each year, even if the money isnâ€™t needed. These plans include 401(k)s, 403(b)s, some 457(b)s as well as IRAs and IRA-based plans such as Simple IRAs and SEPs.However, The Worker, Retiree and Employer Recovery Act of 2008 waives the requirement to withdraw funds in 2009. To learn more, visit www.irs.gov/pub/irs-drop/n-09-09.pdf.

-For people who want to save, Social Security offers online planning tools such as the Retirement Estimator. The Estimator allows people to try out different retirement scenarios. Just plug in some quick information and youâ€™ll get estimates of your future benefits based on your personal earnings record. Try it out at www.socialsecurity.gov/estimator.

WISER

About Us

WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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